Definition of an employment contract
An employment contract is the basis for establishing an employment relationship, in accordance with the provisions of the Polish Labour Code. The employee undertakes to perform work of a specified kind for the employer and under the employer's direction, at a place and time designated by the employer.
Key features of an employment contract:
- Establishment of an employment relationship on the basis of the Labour Code.
- Form of employment: fixed-term contract, probationary contract, permanent (indefinite-term) contract.
- The employee enjoys employee entitlements:
- The right to paid annual leave.
- The right to maternity leave.
- The right to the minimum wage.
An employment contract always constitutes the basis for the existence of an employment relationship. The provisions of the Labour Code oblige the employer to provide the employee with appropriate working conditions, health and safety, and to pay social insurance contributions, including disability, pension, accident and health insurance. Thanks to an employment contract, the employee also has the right to remuneration for work, which may not be lower than the minimum wage set by law.
Definition of a contract of mandate
A contract of mandate is a civil-law contract governed by the provisions of the Polish Civil Code. The contractor undertakes to perform specified legal acts for the principal, but is not obliged to perform work under supervision or at a specified place and time, as is the case with an employment contract.
Key features of a contract of mandate:
- Conclusion of a civil-law contract on the basis of the Civil Code.
- Greater flexibility and freedom in organising work.
- The contractor carries out the assignment independently, according to their own schedule.
- Remuneration terms are set freely by the parties.
- No right to many employee entitlements:
- No paid annual leave.
- No right to maternity leave.
In the case of a contract of mandate, the principal and the contractor may freely set the remuneration terms, and payment may be made as a lump sum or in instalments. However, a contract of mandate does not entitle the contractor to many employee benefits, such as the right to paid annual leave or maternity leave. The contractor may be obliged to pay social insurance contributions only in certain cases, depending on whether they have other grounds for insurance cover.
Employment under a contract of mandate is beneficial for people who value flexibility and independence in carrying out their tasks. However, the lack of job stability and limited social rights can be drawbacks of this type of contract. A contract of mandate is not the same as a contract for specific work, although both are civil-law contracts. It differs from the latter above all in the nature of the obligation – a contract of mandate concerns the performance of activities, whereas a contract for specific work relates to a specific result of the work.
Key differences between an employment contract and a contract of mandate
Legal basis
Employment contract:
- Governed by the Labour Code.
- An employee hired under an employment contract undertakes to perform work personally for the employer, in accordance with Article 22 of the Labour Code.
- The employer must provide the employee with appropriate working conditions and pay social and health insurance contributions.
Contract of mandate:
- Governed by the Civil Code.
- The contractor undertakes to perform specified activities for the principal, but does not have to perform them personally.
- A contract of mandate does not confer the same rights as an employment contract, for example the right to annual leave or protection against termination.
Scope of duties and supervision
Employment contract:
- The employee performs work of a specified kind for the employer and under the employer's direction.
- The employer controls and supervises the way the employee performs the work.
- The employee must comply with the established working hours and follow the employer's instructions.
Contract of mandate:
- The contractor has greater freedom in carrying out the tasks entrusted to them.
- The principal has no direct supervision over how the assignment is carried out.
- Tasks can be performed at any place and time.
Working time
Employment contract:
- Standard working time is 8 hours a day and 40 hours a week.
- The employee is entitled to breaks and to additional pay for overtime work.
Contract of mandate:
- Does not impose an obligation to keep to specified working hours.
- The time for carrying out the assignment is flexible and depends on the arrangements between the parties.
- No right to additional pay for overtime or to breaks at work.
Notice and termination of the contract
Employment contract:
- The termination procedure is strictly defined by the Labour Code.
- The employee is entitled to a notice period, which depends on their length of service with the given employer.
- After the employment relationship ends, the employee receives an employment certificate.
Contract of mandate:
- May be terminated on the terms set out in the civil-law contract.
- The parties may freely determine the rules for terminating the contract.
- A contract of mandate does not entitle the contractor to receive an employment certificate.
Contributions and insurance
Employment contract:
- The employer is obliged to pay disability, pension, sickness and health insurance contributions.
- These contributions form the basis for future benefits, such as a retirement pension, disability pension or sickness allowance.
Contract of mandate:
- Social insurance contributions are paid only when the contractor has no other grounds for insurance cover.
- The contractor may voluntarily pay health and disability insurance contributions, but the lack of an obligation to pay them may result in a lack of social security in the future.
What does a contract of mandate not provide?
A contract of mandate and an employment contract differ significantly in terms of the rights and obligations they provide. A contract of mandate versus an employment contract represents two different forms of employment that offer different entitlements. Below we present the key aspects that a contract of mandate does not provide.
No right to paid leave
A contract of mandate does not guarantee the right to paid annual leave. Under an employment contract, the employee is entitled to annual paid leave in accordance with the Labour Code. The contractor has no such entitlement, which means that any time off work is unpaid.
No protection against termination
In the case of an employment contract, an employee hired for a fixed term or a probationary period is entitled to a notice period. These rules are set out in detail in the Labour Code. A contract of mandate, as a civil-law contract, provides no such safeguards. The principal may end the cooperation at any time, unless the contract provides otherwise, which often means an assignment without remuneration for the unperformed part of the work.
No social insurance contributions
A contract of mandate does not oblige the contractor to have social insurance contributions paid automatically. Under an employment contract, the employee and the employer pay disability, pension, health and sickness insurance contributions. These contributions form the basis for future benefits. The contractor must take care of their own insurance, which can lead to a lack of social security.
No health and social protection
A person employed under an employment contract has guaranteed health cover and the right to social benefits, such as sickness, maternity or parental allowance. In the case of a contract of mandate, such rights are not guaranteed. The contractor must pay health insurance contributions on their own, which can lead to difficulties in accessing medical care when needed.
Not counted toward length of service
Work performed under a contract of mandate does not count toward length of service, which can have negative consequences when determining entitlement to a retirement pension or other employee benefits. Under an employment contract, every period worked counts toward length of service, which is crucial for future entitlements.
No employment certificate
After employment under an employment contract ends, the employee receives an employment certificate, which is an important document confirming the period of employment and professional experience. A contract of mandate does not provide for an obligation to issue an employment certificate, which can make it harder to document professional experience and look for new job offers.
When to choose which form of employment – from the employee's perspective
The decision to choose between an employment contract and a contract of mandate can significantly affect your professional and personal life. Both forms of employment have their advantages and disadvantages, so it is important that you fully understand the benefits and limitations associated with each of them. Here is what you should know before deciding which form of employment will be most beneficial for you.
When to choose an employment contract?
Job stability
- An employment contract comes with job stability, which matters if you value the certainty of a steady income and long-term employment.
- Working under a fixed-term, permanent or probationary contract gives you protection against sudden job loss.
Employee rights and social benefits
- Paid leave: As an employee hired under an employment contract, you are entitled to paid annual leave and other benefits, such as maternity and parental leave.
- Health cover: You are entitled to sickness, maternity and parental allowances, which protects you in situations requiring a break from work.
Social insurance
- Insurance contributions: The employee pays disability, pension, health and sickness insurance contributions, which guarantees you benefits in the future.
- Length of service: Periods of employment count toward your length of service, which matters when determining entitlement to a retirement pension and other benefits.
Fixed working hours and pay
- Working time: An employment contract provides set working hours, which allows for better planning of your private life.
- Minimum wage: You are guaranteed to receive at least the minimum wage plus additional pay for overtime work.
Employment certificate
- Documenting experience: After the employment relationship ends, you receive an employment certificate, which documents your professional experience and is an important asset when looking for a new job.
When to choose a contract of mandate?
Flexibility and independence
- Freedom of choice: A contract of mandate gives you greater freedom in choosing where and when you work, which is ideal if you value flexibility and the ability to fit work around other commitments.
- No supervision: You can carry out assignments without constant supervision from an employer, which increases your independence.
Lower employment costs
- Higher net pay: A contract of mandate may involve lower costs related to paying social insurance contributions, which can mean higher net pay for you.
- No additional benefits: You do not need to worry about the employer's obligations related to leave and other employee benefits.
Short-term and project-based assignments
- Project work: A contract of mandate or a contract for specific work is ideal for work that is project-based, short-term and does not require constant supervision.
- Seasonal work: A contract of mandate can be a better choice for seasonal or casual work.
Contractors with multiple sources of income
- Additional income: If you already have other sources of income and want to earn extra, a contract of mandate can be advantageous, without the need to commit to a permanent employment relationship.
Contract of mandate or employment contract?
The choice between a contract of mandate and an employment contract depends on your individual needs and preferences. Contracts of mandate and employment contracts differ significantly in terms of the protections, flexibility and costs they offer. A contract of mandate instead of an employment contract can be advantageous if you value flexibility and independence, but you must be aware of the limitations that a contract of mandate entails.
In some cases, replacing an employment contract with a civil-law contract while retaining all employee entitlements is difficult to achieve and requires careful analysis. Any permissible replacement of an employment contract with a contract of mandate should take into account both the benefits and the potential risks for you as an employee.
Before making a decision, carefully analyse your professional and personal needs in order to choose the form of employment that best meets your expectations and provides you with adequate security for the future.
Summary
An employment contract and a contract of mandate differ in terms of rights and obligations. An employment contract provides job stability, employee rights, paid leave, health cover and social insurance contributions. Types of employment contracts include fixed-term, permanent and probationary contracts, and each of these forms counts toward length of service.
A contract of mandate offers greater flexibility, no constant supervision from an employer and the ability to adapt work to your own needs. The contractor is free to choose where and when they work, which is beneficial for people carrying out short-term projects or looking for additional sources of income. However, a contract of mandate does not provide entitlements such as paid leave, protection against termination or automatic payment of social insurance contributions.
The decision whether to choose a contract of mandate or an employment contract depends on individual needs and preferences. A contract of mandate will be chosen by people who value flexibility, while an employment contract will be better for those looking for stability and full employee rights. Employment contracts and civil-law contracts each have their specific advantages and disadvantages, so it is worth carefully considering what matters most to you.
